"Let's see what emerges, but at the moment, we just need to appreciate just how serious a situation this is.

"The group, which is now in apparent control of large swathes of Iraq and parts of Syria, is a group that was too radical for Al Qaeda.

"They are an extremist splinter group from the most extreme terrorist group the world has seen, so let's not underestimate just how serious this situation is."

Mr Abbott said he would continue to talk to the US about any contribution or support Australia might provide.

However, Greens leader Christine Milne told Insiders the United Nations, not the US, should be taking the lead in any international response.

"We need to be working within the United Nations. It will not serve Australia's interests to just follow the United States into Iraq," she said.

"We do not want to follow the United States blindly as John Howard did, and clearly it didn't work last time in Iraq and it won't work this time.

"We need to forge our own way in terms of foreign policy."

Australians in Iraq urged to leave immediately

Foreign Minister Julie Bishop has urged any Australians in Iraq to leave the country immediately while the airport in Baghdad remains open.

Ms Bishop said she phoned the Australian Ambassador in Iraq overnight to check that embassy staff are safe.

She said consular support for Australians in Iraq will be limited due to the security situation.

"If Australians must stay in Iraq then they must ensure that their personal circumstances and their security is absolutely safe," she said.

Ms Bishop also weighed in on Australian assistance in the country, saying any immediate contribution by Australia is more likely to involve aid and not ground troops.

"I didn't envisage a circumstance where we would be sending in troops, but we certainly stand ready to support the humanitarian crisis should a request be made," she said.

No change in East Jerusalem policy, says PM

Mr Abbott also moved to quell a diplomatic row over his government's policy position on East Jerusalem.

Last week, a delegation representing nearly 20 countries met foreign affairs officials to warn they could lodge trade sanctions over the Government's decision to stop referring to Israeli settlements in East Jerusalem as "occupied".

Mr Abbott has downplayed fears Australia's trading relationships could be at risk.

"Absolutely no change in policy, there's been a terminological clarification," he said.

Mr Abbott said the Government still supports a two-state solution and contributes aid to Palestine.

He said Ms Bishop will meet with some concerned ambassadors in the coming days to explain the Government's position.

"This is an area where people are inevitably extremely sensitive," he said.

Mr Abbott said he does not think the controversy will affect trade ties with countries in the region.

Abbott hails global trip a success

Meanwhile, Mr Abbott declared his round-the-world trip a success, as he heads back to Australia.

He said the trip had been significant, bolstered trade and security ties, and highlighted Australia's place on the world stage.